Bankruptcy Overview

Bankruptcy is a legal process governed by the U.S. Bankruptcy Code which allows consumers and
businesses to eliminate their debt.  The person or company filing for Bankruptcy is called the
Debtor.   The
person, company or bank to whom a debt is owed is called the
Creditor.  Personal bankruptcy is filed under
Chapter 7 or Chapter 13 of the Bankruptcy Code.  Chapter 7 bankruptcy is usually the preferred type of
bankruptcy for most people who do not have much income or assets.   Chapter 13 is more suitable for those
who have income higher than the median income as set by the IRS guidelines, who have equity in assets worth
more than the allowed exemptions or those who are behind on secured debts, such as their mortgage, and
want to save their property from foreclosure or repossession.   Both types of bankruptcy have restrictions
and eligibility requirements.  Your attorney should be able to determine which type of Bankruptcy you qualify
for and offers you the most protection and the best relief.  Bankruptcy is administered by a
Trustee.  The
Trustee’s job is to make sure there are no fraud issues, to ascertain if there are assets that may be taken from
the Debtor to sell (or liquidate) to pay off some of the debt the Debtor owes, to administer the bankruptcy
case and make sure all schedules are filed accurately.

Types of Debts

In Bankruptcy, there three (3) different types of debt:  Priority debt, Secured debt and Unsecured debt.  
Priority includes recent IRS debt, child support and alimony.  Secured debt includes a mortgage or car
payment.  Unsecured debt is any debt that is not secured by any property such as most credit cards, medical
bills or personal loans.  Priority debt is not dischargeable.  Secured debt may be discharged if the Debtor
chooses to surrender the property tied to the debt.  Unsecured debt may be discharged notwithstanding any
issues in the Bankruptcy process.

Chapter 7

Chapter 7 bankruptcy is often called "liquidation" bankruptcy as the Trustee may take from the Debtor any
property that is not exempt to try to pay off some of the debt sought to be discharged.   Certain property may
not be taken from the Debtor as this property is protected by statutory exemption rules.  
Exemptions vary
from state to state and sometimes, federal exemption rules may apply.   You attorney would be able to
determine which exemption rules apply in your particular case because there are jurisdictional issues that
determine exemptions.
Chapter 7 is widely known to be generally quick and more attractive because it wipes away all unsecured
debt right away.  Usually, in the Southern District as of the date of this writing, a Debtor who files Chapter 7
bankruptcy and faces no objection or issues from the Trustee can expect to receive their discharge within
about 3 – 4 months.   Once the Debtor receives the discharge, the Debtor can be assured that he / she is no
longer responsible for those debts listed in the petition , and the Debtor gets his/her  fresh start at building a
new financial future.
Generally, to qualify for Chapter 7 bankruptcy, your household income should be under the median income
for your household size, your expenses should be more than your income and you must not have filed and
received a prior Chapter 7 discharge in the previous eight (8) years.  If your income is higher than the median
income, you may still qualify for Chapter 7 by passing the Means Test.    Your attorney will be able to
account for all possible allowed expenses and deductions to help you pass the means test .

Chapter 13

Chapter 13 bankruptcy is often referred to as “Reorganization” bankruptcy.  Chapter 13 allows debtor to
repay some or all of their debt over a period of 3 – 5 years, called the Chapter 13
Payment Plan.  Chapter
13 bankruptcy is a good option for several types of debtors:

Save-A-Home:  Some debtors need to file Bankruptcy as a last resort to save their home.  For Debtors who
have fallen behind on their mortgage payments, Chapter 13 allows a Debtor to split their arrearage amount
over  the 3 - 5 year payment plan period.   As of June 2010, Chapter 13 Bankruptcy may also help Debtors
apply for and receive a mortgage modification.

Loan Modification Mediation Program: As of April 2013, the Florida Southern District has implemented
Loss Mitigation Mediation Program to facilitate the loan modification process and communication
between the Debtor and the Creditor.  Although new, Debtors who have used this program so far have
experienced satisfactory results.

Lien Stripping:  Chapter 13 is an attractive option for most homeowners these days who have more than one
mortgage.  If your home is worth less than the total amount of your first mortgage, you may be able to strip
the second or third lien.  Certain restrictions apply and your attorney can analyze your case for eligibility for
stripping your second or third lien through bankruptcy.

High Income:   Some debtors file Chapter 13 bankruptcy because their income is too high to qualify for
Chapter 7.

Other reasons:  There are other reasons that a debtor may choose Chapter 13 over Chapter 7.  Your
attorney can discuss with you the advantages and disadvantages of each type of bankruptcy in your particular
case so that you make the best choice.  

Bankruptcy is a complex area of law, with many federal rules, local rules, exceptions and procedural
requirements.  An experienced attorney will be able to offer you the protection and relief  afforded through
the Bankruptcy process with minimal complications and mistakes.   Do not be swayed by paralegals or notary
publics who claim they have experience and knowledge to prepare your petitions.  These agencies are not
attorneys and are not authorized to practice law, which is why they do not sign your petitions or go to court
with you.  

Speak to an attorney to discuss your case and ask your questions.  We offer a Free initial consultation.

The hiring of an attorney is an important decision.  Contact our office for free written material on our firm,
attorney and services.  We are a debt relief law firm.  We provide relief under the Bankruptcy Code and the Fair
Debt Collection Practices Act.
110 E. Broward Blvd.
Suite 1700
Fort Lauderdale, FL 33301

Offices located in:
Downtown Fort Lauderdale
West Sunrise

Miami: 305-362-6500
Broward: 954-727-5558

We may help you PROTECT  your assets
•        Harrassing creditor CALLS!
•        Garnishments!
•        Lawsuits & Judgments!
•        Foreclosure Debt!
•        Repossession Debt!
•        High Car Payments!
•        Medical Bills!
Personal Loan & Credit Card Debt!
•        IRS Debt!
•        Foreclosure!


  • Save your home from
  • Immediately stop a
    Foreclosure Sale!
  • Allow you to catch up on
    mortgage arrears!
  • Strip a second  mortgage
  • Modify the terms of your
  • Save your car from
  • Reorganize your debt into an
    affordable payment plan for a
    period of 3 - 5 years.
"It is said that the world is in a state of bankruptcy --
that the world owes the world more than the world can pay."
-- Ralph Waldo Emerson